The economic potential of Australian cities is limited by the gap between where people work and where they live.

Cities generate 80 per cent of ­Australia’s GDP, but Sydney’s CBD is accessible to only 40 per cent of the city’s workers by public transport, according to independent think tank, the Grattan Institute.

It’s accessible to just 23 per cent of those who travel by car.

While more jobs are located in the suburbs than in the CBD, workers beyond the reach of Australia’s cities have fewer job opportunities and reduced job security.

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A Grattan Institute study, released on Monday, argues for the development of deep labour markets across broader metro areas by providing more inner-suburban housing options.

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The report, Productive cities: opportunity in a changing economy, said that not enough housing is being built where it is needed – around the middle suburbs.

It suggested opening up those ­suburbs to more housing and also encouraging people to live closer to jobs, as a way to reduce commuting time. This could be done by increasing the housing options available in established parts of the city.

A similar idea has formed part of the NSW government’s planning white paper released last month.

And the Victorian planning strategy, to be released in coming months, has also been drafted with a “20-minute city" as a goal.

Jane-Frances Kelly, cities program director for Grattan, said CBDs were often where knowledge-intensive jobs were based, in high-growth and exportable industries.

But poor access to the CBD meant industries had a smaller pool of people to draw from, limiting capacity to hire the best for the job.

City workers are also spreading their risk – if they lose a job there is a much better chance of finding another and maximising their own potential and development.

“It’s not just about the CBD, jobs are spread elsewhere, and both parts of the economy need deep labour markets, so we needed to look at who lives where and what sort of access they have to those labour markets," Ms Kelly said

Workers disadvantaged in outer suburbs

Outer suburban pockets, such as Broadmeadows and Dandenong in Melbourne, and Sydney’s outer west, are the most concentrated for low­income earners and people without post-school qualifications. But lack of transport infrastructure in those areas makes it harder to access jobs.

“If you live in these outer areas, even if you are doing 45 minutes by car, you can often only access a small ­­pro­portion of jobs in the city," Ms Kelly noted.

Good economic performance across the country is masking the economic and social problems caused by gaps between jobs and people. If there was a downturn and unemployment rose, she said more areas could see a growing number of social problems.

“Ultimately you have poorer people on the outside, locked out, and that’s where we’re heading if these patterns continue," Ms Kelly said.

“You could argue that the structure of our cities is making some of our ­economically vulnerable households more vulnerable."

The Grattan report aimed to provide understanding of how people think about productivity growth, and reveal how spatial influences can hold ­workers back from accessing oppor­tunities.

Ms Kelly said past experience showed that wholesale shifting of ­government departments, or sub­­­si­dising firms to move to suburban areas , did not always suit workplaces, and tended not to be a solution. She said more roads were not the answer either, as they simply fill up.

“We must allow more people to live closer to jobs. It is important not to lock down the middle suburbs with ­restrictive zoning, because that will dampen productivity and restrict opportunity," Ms Kelly said.

“What’s good for the economy is good for [all] , and doesn’t need to cost a lot of money."